The National League of Cities has released an early analysis of the impact of the COVID-19 pandemic on municipal finances. They found that Ohio—through its cities and villages—is among the top 10 states most at risk for revenue loss.
Ohio’s cities and villages rely on income taxes to fund many essential services, capital repairs and improvements. In some cities, over 50% of their budgets derive from income taxes. With skyrocketing rates of unemployment, income taxes are down and Ohio’s municipalities are facing severe budgetary constrictions. Additionally, many cities rely on fees and fines to supplement their budgets, which are now not expected to come in. Akron, for example, is projecting a $500,000- $750,000 loss from cancelled summer festival fees and associated revenues.
While the full extent of the COVID-prompted reduction of income taxes and fees is still unknown, Ohio’s legacy cities are already tightening their belts and projecting significant shortfalls in their upcoming budgets. GOPC expects major service cuts and few capital investments as budgets adjustments and new budgets for the coming fiscal year are finalized.
GOPC recently surveyed local newspaper reporting to get a rough sense of the financial position of Ohio’s legacy cities (list of surveyed cities here, on page 3). Our survey, which occurred May 1-7, 2020 found that:
Half of Ohio’s large and mid-sized legacy cities have already begun furloughing and laying off sizeable numbers of employees. For example, the city of Dayton has furloughed 25% of its workforce and expects another 18% reduction through furloughs if relief aid does not come soon. Cincinnati, early into the crisis, furloughed 1,700 employees.
Large and mid-sized legacy cities are warning that street paving projects, and other capital improvement projects may not move forward. Services, like municipal pools and park district activities may not occur either.
13 of Ohio’s 16 small legacy cities are still maintaining full staffing but have said that furloughs and layoffs may occur in the near future. Those cities that have trimmed their budgets through staffing changes have laid off parks and rec staff, instituted salary cuts to top-end earners, and sought volunteers for voluntary furloughs.
Like their larger counterparts, the small cities are beginning to signal that capital improvements may not move forward, though those projects under contract are likely to proceed.
All cities continue to prioritize fire and police staff but several cities have put on hold hiring the newest class of firefighters, and warn that cuts may have to be made to these essential response services.
Legacy cities—large, mid-sized, and small—were already operating with lean budgets, with some heading into their next fiscal budget with a potential deficit. While some cities—notably several small legacy cities—have reserves, these reserves are not great enough to depend upon for the long term.
Individually, Ohio’s cities are anticipating the loss of tens of millions of dollars; in the aggregate, that’s millions of dollars that are not flowing through Ohio’s economy or providing the essential, necessary services cities provide.
Without partnership from the state and federal governments, Ohio’s local municipalities—large and small—will be a desperate place.
GOPC stands with our colleagues who are on the frontlines making the case for support. Follow Ohio Mayors Alliance, Ohio Municipal League, County Commissioners Association of Ohio and Ohio Township Association for the most up-to-date information on efforts to secure support and partnership.